Amid sinking consumer confidence nationally, Island towns and schools have received some rare good news: the RM Packer company agreed to renegotiate their fuel contract based on lower oil prices, saving them as much as $300,000 this winter.

Normally RM Packer signs a contract — with a locked-in fuel cost — with a group that includes all six towns for heating municipal buildings, the school system, the Martha’s Vineyard Commission, the county, the Martha’s Vineyard Airport and the Dukes County Sheriff’s department. Island Elderly Housing, the Martha’s Vineyard Land Bank and Wampanoag Tribe of Gay Head (Aquinnah) are among others covered by the contract.

All are part of the Dukes County regional fuel bid program, which is represented by the Dukes County Commissioners and the county manager during the annual negotiations.

The contract, which went into effect July 1, was signed earlier in the year when the cost of oil was much higher; members agreed to pay $4.03 a gallon, which at the time seemed like a fair price. In previous years the fixed price has saved members money as the price of fuel climbed during the winter season. Members of the group also wanted a fixed price this year for budgeting purposes.

But since the contract was signed, the cost of fuel has dropped substantially. The cost of both heating oil and gasoline has dropped nearly 60 per cent in some markets since peaking in July. On the Vineyard the cost of gasoline and heating fuel has dropped approximately 40 per cent.

So county manager Russell Smith contacted Ralph Packer, owner of the RM Packer Company, in hopes of convincing him to let members of the fuel bid program out of the current contract. Mr. Packer was open to the idea from the start but had to do some negotiating with his own suppliers.

Mr. Smith last week sent a letter to members of the fuel bid program announcing that RM Packer agreed to terminate the current contract on Jan. 1; members would purchase fuel from the company at the daily delivery price — currently around $2.70 per gallon — until the end of the fiscal year on July 1.

“This should save us all money,” Mr. Smith writes in the letter. “The county would like to thank RM. Packer Co. for their willingness to renegotiate the contract and help the communities maintain their budgets.”

Mr. Smith this week said switching from a fixed price to the daily delivery price could collectively save members of the group as much as $300,000 this winter. “Any money the towns, schools and other members can save right now goes a long way,” he said.

Mr. Smith praised the RM Packer company for allowing group members out of their contract. “I don’t think there is any doubt that Ralph Packer and the RM Packer Company made some concessions,” he said.

Mr. Packer said he felt tearing up the previous contract was the right thing to do.

“The market is changing so rapidly right now. Nobody was aware these rate changes were even possible back in the summer. It’s a bit of a gamble to lock in the fixed rates, but it’s a bit of a gamble to pay the [daily delivery] rates . . . considering the market right now, we felt this made sense,” he said, adding:

“We have done business with these people for many years. We want to keep things positive.”

Superintendent of schools James K. Weiss said the change could save the school system as much as $100,000 this winter. When the budget was put together last year school officials did not anticipate the cost of fuel would skyrocket over the summer, and Mr. Weiss had feared the account would end with a shortfall.

“Now we may even end the year with a small surplus. That’s huge for us,” he said.

At a recent West Tisbury selectmen’s meeting, town leaders praised Mr. Packer for allowing the change, and also Mr. Smith for his nifty negotiating.

“This is a huge benefit to the town of West Tisbury . . . it’s a remarkably equitable solution for us,” town administrator Jen Rand said.